Understanding Home Equity Acronyms: What Do HEI, HEA, HESA, HELOC, HEL, and HELOAN Stand For?

If you’ve been researching ways to tap your home equity, you’ve probably run into a bowl of alphabet soup: HEA, HEI, HESA, HELOC, HEL, HELOAN … the list goes on.

To be honest, we don’t know why the financial services industry has to be so confusing sometimes. But what we do know is: confusion about acronyms shouldn’t be the reason you delay an important financial decision.

So, we at LendEDU created this clear, skimmable guide to walk you through what each acronym means. Plus, a quick run-through of how HEIs, HEAs, HESAs, HELOCs, HELs, and HELOANs differ, so you can ultimately choose the best product for you.

Table of Contents

1. Home equity acronym glossary
2. What is an HEA (home equity agreement)?
   1. Example
3. What is a HELOC (home equity line of credit)?
   1. Example
4. What is a HEL or HELOAN (home equity loan)?
   1. Example
5. HEA vs. HELOC vs. HEL: how they compare
   1. When an HEA might make sense
   2. When a HELOC or HEL might make more sense

Home equity acronym glossary

Before we dig deeper, here’s a quick cheat sheet to skim.

• HEA (home equity agreement): Lets you access cash today in exchange for giving an investor a share of your home’s future value. It has no monthly payments.
• HEI (home equity investment): Another name for an HEA. It’s the same product with a different label.
• HESA (home equity sharing agreement): Also the same as an HEA or HEI. All three work the same way.
• HELOC (home equity line of credit): A revolving credit line backed by your home. You borrow, repay, borrow again, usually with variable interest.
• HEL or HELOAN (home equity loan): A lump-sum, fixed-rate loan with predictable monthly payments. Sometimes called a “second mortgage.”

What is an HEA (home equity agreement)?

An HEA lets you access your home’s equity without adding a monthly debt payment to your plate. Instead of borrowing money, you essentially sell a share of your home’s future value to an investment company. That’s why you’ll also see HEAs labeled HEIs or HESAs—they’re all variations of the same product.

Here’s the gist of how an HEA, HEI, or HESA works:

1. You receive a lump sum today.
2. The company gets a percentage of your home’s future value.
3. You repay the original amount (plus their share of appreciation) when you sell or buy out the agreement.

Example

You take $100,000 today in exchange for 20% of your home’s equity. If your home rises in value, you repay the original amount plus 20% of that growth when you sell or buy back the agreement. If your home declines in value, the investor takes a hit.

Because there’s no monthly payment requirement, HEAs tend to be friendlier if you have high equity but inconsistent income, recent credit challenges, or a high debt-to-income ratio. Some of the best HEA companies (like Point) work with credit scores around 500—far lower than most HELOC or HEL lenders.

What is a HELOC (home equity line of credit)?

A HELOC is a revolving credit line secured by your home. It’s kind of like a credit card, except it has a much lower interest rate because it’s backed by your house. You’re allowed to borrow, repay, and borrow again during what’s called the draw period, which usually lasts five to 10 years.

Most HELOCs come with variable rates, which means your payment can drift up or down as the prime rate moves. A few lenders, like FourLeaf Credit Union, let you lock in part of your balance at a fixed rate (which can give you some certainty), but it’s not something every lender offers.

As for approval, the bar tends to sit higher than what you see in marketing copy. Lenders might say they accept scores around 640, but the borrowers who actually get approved (and get the best rates) are usually closer to 720 and up.

Many people use HELOCs for home renovations, debt consolidation, and large expenses you want to spread out over time.

Example

You’re approved for a $150,000 HELOC with a 10-year draw period and a variable APR starting at 8.25%. You decide to use $30,000 to remodel your kitchen. You only pay interest on the $30,000 you’ve actually borrowed, not on the full $150,000 credit line. A year later, you’ve paid down $10,000—so you can borrow that $10,000 back again if another expense pops up.

Most HELOCs work this way, but a few lenders (like Figure and Aven) do things differently and require you to draw the full amount at closing. If you choose one of those lenders, you’d start out owing the entire $150,000 from day one.

After the draw period ends, whatever balance you still owe rolls into a repayment period (often 10–20 years), and you make monthly principal-and-interest payments until it’s fully paid off.

What is a HEL or HELOAN (home equity loan)?

A home equity loan (sometimes called a HEL or HELOAN) is the simplest, most traditional way to borrow from your home’s value. Instead of a revolving line like a HELOC, you get one lump sum upfront and repay it with fixed monthly payments over a set number of years.

You have a fixed interest rate from Day 1, so your payment never changes. (That’s also why HELOANs are often called second mortgages.)

Many people go the HELOAN route when they’re financing one-time, high-cost projects like a kitchen upgrade, medical bills, or consolidating higher-interest debt.

Similar to a HELOC, lenders look for you to have solid credit, steady income, and a manageable debt-to-income ratio to get one of the best HELOANs.

Example

You take out a $75,000 home equity loan at a fixed 8.50% APR with a 15-year term. The lender gives you the full $75,000 upfront, and your monthly payment stays the same—about $740—every month for the entire 15 years. Because the rate is locked in, your payment never changes, which can make budgeting easier.

The flip side: you can’t borrow more later without applying for a brand-new loan, since a HEL isn’t a revolving line like a HELOC.

HEA vs. HELOC vs. HEL: how they compare

If that felt like a lot of information to digest, this table also breaks down the biggest differences between all of these acronyms:

Feature	HEA	HELOC	HEL
How it works	Cash upfront in exchange for a share of your home’s future value	Revolving credit line you borrow from as needed	Lump-sum loan with fixed monthly payments
Monthly payments	None	Required	Required
Interest rate	No interest; repayment tied to home value	Variable rate	Fixed rate
Typical credit score	~500+ often accepted	720+ most common for approval	~680–700+ typical
When you repay	When you sell or buy the investor out	Monthly during draw/repayment periods	Monthly over a set term
Best for	Homeowners with high equity but limited income or credit challenges	People who want flexible access to funds over time	People who want a predictable payment and know their exact loan amount

When an HEA might make sense

HEAs work well when you’re rich in equity but lacking in other areas. Maybe your income fluctuates, you’re still rebuilding your credit, or a traditional lender has already told you no. Because HEA companies invest in your home rather than lending, they can be far more lenient.

And since there are no monthly payments, an HEA can feel like actual breathing room, especially if you’re juggling debt, running a small business, covering caregiving costs, or just trying to get ahead without adding one more bill to your plate.

The tradeoff is the equity-sharing part: if your home’s value rises, the amount you owe rises with it. So the ease on the front end comes with a bigger giveback on the backend.

HEAs might make sense if:

• You’re comfortable sharing a slice of future appreciation
• You expect to sell within a few years
• You need cash now but want zero new monthly payments
• Your credit/income profile doesn’t fit the loan’s requirements

When a HELOC or HEL might make more sense

If you qualify, HELOCs and HELs tend to be less expensive long-term because you’re paying interest rather than sharing equity.

HELOCs or HELs tend to be a better fit than HEAs, HEIs, and HESAs if:

• You plan to stay in your home long term
• You want to keep all your home appreciation
• You have strong credit and steady income
• You can afford the monthly payment

On an individual level, a HELOC may make sense when you want:

• Access to funds over time, not all at once
• The ability to borrow, repay, and borrow again as needs come up
• A flexible budget for projects or expenses that happen in stages (like renovations or tuition payments)

And a HEL may be better when you want:

• A single lump sum upfront for a defined project or expense
• Fixed monthly payments that stay the same every month
• A clear payoff timeline with a set end date